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What happened to Terra Luna crypto?

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What happened to Terra Luna crypto

What happened to Terra Luna crypto: Terra was one of the most valuable (and reliable) digital currencies in the world.

The value of the Terra “stablecoin” was unexpectedly “unpegged” from the US dollar on Tuesday, May 10, 2022, resulting in a massive sell-off.

Terra’s value plummeted from $US1 (where it was always supposed to be) to 60 cents as a result.

Terra’s value was reduced to 20 US cents on Wednesday, May 11, 2022, after another meltdown.

Terra’s crash resembled a crypto “bank run,” as users hurried to withdraw their funds.

Terra Luna crypto 1

image via: Blaze trends

What happened to Terra Luna crypto?

Terra (UST) is a “algorithmic” stablecoin whose value is guaranteed by Luna, a “sister” token that runs on pre-programmed “smart contracts.”

When the value of Terra falls below $1, it can be exchanged for Luna tokens (at a small profit).



The exchange of Terra for Luna tokens is supposed to keep the value of both tokens steady.

The issue was that these complicated algorithms all failed miserably at the same moment.

Luna and UST both plummeted at the same moment, in what observers have dubbed a “death spiral.”

Strangely, no one knows who caused the Terra and Luna prices to plummet.

Many social media users, on the other hand, are pointing fingers at large US hedge funds and trading firms.

However, BlackRock and Citadel Securities have released statements denying any role in Terra’s demise.

“We don’t know if the momentum was built on collusion,” said Lisa Wade, CEO of blockchain startup DigitalX. What happened to Terra Luna crypto

 



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